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Surging Earnings Estimates Signal Upside for Icon PLC (ICLR) Stock

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·2 min read
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Icon PLC (ICLR) appears an attractive pick given a noticeable improvement in the company's earnings outlook. The stock has been a strong performer lately, and the momentum might continue with analysts still raising their earnings estimates for the company.

The rising trend in estimate revisions, which is a result of growing analyst optimism on the earnings prospects of this contract research organization, should get reflected in its stock price. After all, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements. Our stock rating tool -- the Zacks Rank -- is principally built on this insight.

The five-grade Zacks Rank system, which ranges from a Zacks Rank #1 (Strong Buy) to a Zacks Rank #5 (Strong Sell), has an impressive externally-audited track record of outperformance, with Zacks #1 Ranked stocks generating an average annual return of +25% since 2008.

For Icon PLC, strong agreement among the covering analysts in revising earnings estimates upward has resulted in meaningful improvement in consensus estimates for the next quarter and full year.

The chart below shows the evolution of forward 12-month Zacks Consensus EPS estimate:

12 Month EPS

Current-Quarter Estimate Revisions

The earnings estimate of $2.41 per share for the current quarter represents a change of +40.12% from the number reported a year ago.

Over the last 30 days, the Zacks Consensus Estimate for Icon PLC has increased 11.06% because four estimates have moved higher compared to no negative revisions.

Current-Year Estimate Revisions

The company is expected to earn $9.25 per share for the full year, which represents a change of +41.65% from the prior-year number.

The revisions trend for the current year also appears quite promising for Icon PLC, with five estimates moving higher over the past month compared to no negative revisions. The consensus estimate has also received a boost over this time frame, increasing 8.06%.

Favorable Zacks Rank

Thanks to promising estimate revisions, Icon PLC currently carries a Zacks Rank #2 (Buy). The Zacks Rank is a tried-and-tested rating tool that helps investors effectively harness the power of earnings estimate revisions and make the right investment decision. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

Our research shows that stocks with Zacks Rank #1 (Strong Buy) and 2 (Buy) significantly outperform the S&P 500.

Bottom Line

While strong estimate revisions for Icon PLC have attracted decent investments and pushed the stock 11.4% higher over the past four weeks, further upside may still be left in the stock. So, you may consider adding it to your portfolio right away.


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